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 GREGORY WILPERT

CHANOING
VENEZUELA
BY TAKINO POWER
THE HISTORY AND POLICIES
OF THE CHAVEZ GOVERNMENT
"0utstanding, and highlY informative" Noam Chomsky

ililil/ililt
079
"This fascinating study-deeply informed, penetrating in its
analysis, comprehensive in scop*Xplores the historical and
socioeconomic roots of the Venezuelan initiatives of recent years'
the conflicts they have engendered, the achievements and pitfalls,
the animating ideals of a genuinely participatory society, and the
prospects for realizing them in ways that if successful, might have
significant impact not only for Latin America but well beyond."
Noam ChomskY

"Gregory Wilpert's book combines academic insight with

perspectives gained from living in Venezuela through the
tumultuous years of the Chdvez administration. His book offers the
best geReral introduction to the complex politics of a country and
a leader rilaking a profound impact on global politics at the dawn
of this new century." Daniel Hellingeri Professor of Political Science
at Webster University and co-editor of Venezuelan Politics in the
Chdvez Era

"Greg Wilpert knows Venezuela intimately and gives us the most

thorough and objective analysis of the Ch6vez government's
policies we are likely to find. A thoughtful and useful book for the
21st century and, let us hope, beyond." Susan George, Chair of the
Planning Board of the Transnational lnstitute, author of Another
World is Possible lf ...

Since coming to power in 1998, the Chdvez government has inspired

both fierce internal debate and horror amongst Western governments
accustomed to counting on an obeisant regime in the oil-rich state.
ln this rich and resourceful study, Greg Wilpert exposes the self-
serving logic behind much middle-class opposition to Venezuela's
elected leader, and explains the real reason for their alarm. He
argues that the ChAvez government has instituted one of the world's
most progressive constitutions, but warns that it has yet to overcome
the dangerous specters of the country's past. j
I
i
I
Current Affairs rsBN t?8-1,-aqqL?-55?-q I

{
I

Y
www.versobooks.com
,ilil1il[ililrlrlrlrl[[ll (
$26.95/r1 6.99/$33.50CAN t
D6ign: Dan Mogford x
Cover photo: Ho/Corbis
 IIEWTON FREE LIBRARY
.NEWTON, MA

Changing Venezuela by
Taking Power
 Changing Venezuela by
Taking Power

The History and Policies of the Chiuez Goaernment

GREGORY \TILPERT

v
VERS O
London . NewYork
 First published by Verso 2007
@ Gregory \i?ilpert 2007
All righa reserved
987.064
w86C The moral rights of the author have been asserted

2007
13579108642
Verso
UK: 6 Meard Street, London \(1F OEG
USA: 180 Varick Sueet, New York, NY 100141606
www.versobooks.com

Verso is the imprint of New Left Boola

ISBN: 978-l -8 4467 -552-4 (pbk)

ISBN: 978-l -8 4467 -07 | -0 (hbk)

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Caaloging-in-Publication Data

A catalog record for this book is available from the Library of Congress

Typeset in Garamond by Hewer Text UK Ltd, Edinburgh

Printed and bound in the USA by Courier Stoughton Inc.

t
 Contents

Acknowledgments vlt

Introduction

1. The Dialectic of Counter-Revolution and Radicalization 9

2. Governance Poliry 29
3. Economic Policy 69
4, Social Policy i05
5. Foreign Policy l5r
6. Opportunities, Obstacles, and Prospects 183

Epilogue: 2007-Year of Transition to

Twenty-first Century Socialism? 219

Appendi* \0flhat is Twenty-first Century Socialism? 237

Notes 267
References 295
Index 303
 Acknowledgments

This book was a long time in the making-about five years' My wife and

I originally came up with the idea back in 2002, shortly after the coup
atrempt, thinking that after the coup had called the world's attention to
Venezuela, it would be a good idea to write a general overview of what
the Ch6vez government has done since it came into office. However, it
proved to be far more difficult to simultaneously work as a freelance
writer and to write an unremunerated book than I had imagined. I
originally thought I could simply Put together an anthology of my
articles on Venezuela, but this did not work well. So, I then proceeded to
write the book in my spare time, between freelance jobs. fu a result and
due to a variery of other unforeseen circumstances beyond my control, it
took far longer to complete than originally anticipated.
Finally, though, here it is! And the person I have to thank first and
'Without
foremost for it seeing the light of day is my wife, Carol Delgado.
her unquestioning suppon, critical suggestions, dedication, faith, patience,
and love, it would never have gotten done. This is her book and if it
weren't for the fact that I am the one who ultimately bears responsibiliry
for the boolis shortcomings, her name ought to be on the cover too'
Over the years, others have also helped me along the way. Here I
should particularly mention the many, many Venezuelans, ordinary and
leaders, opposition, pro-goverrirhent, and "ni-ni" (neither Pro- nor anti-
Chivez) who allowed me to interview them or casually talkwith them for
this book, and for my other writing projects that contributed to this
book. There are too many to mendon and I am bound to leave many out
if I try because some of these interviews or conversations took place many
years ago. Many of the interviews, though, are transcribed on the website
Venezuelanalysis. com.
vlll GREGORY'$O'II-PERT

Others who have helped in a variety of ways to move the project

forward, whether via discussions or logistical support, include (in no
particular order): Alex Main, Eva Golinger, Marta Harnecker, Michael
Lebowitz, Martin Sanchez, Eduardo Daza, Jonah Gindin, Sharmini
Peries, Tariq AIi, Michael Fox, Simone Baribeau, Chris Carlson, Steven
Mather, Alex Holland, Sarah \(/agner, my inJaws: Isabel, Grecia, Luis-
Miguel, Margarita, and Luis, and my parents: Bernhard and Czarina.
Also, at various points in rhe project several individuals reviewed
chapters or the entire manuscripr and I am very grateful to them for
having gone through the trouble and, in many cases, for having provided
me with invaluable advice. These include Raul Zelik, Perry Anderson,
Michael Albert, three anonymous reviewers assigned by Verso, and my
wife Carol. I tried to adhere to their suggestions whenever possible, but
was not always able to do so, whether out of stubbornness or lack of
understanding.
Gregory \ffilpert
Caracas, July 10,2007
 Introduction

La verdad de Venezuela
no se ve en el Country club
la verdad se ve en los cerros
con su gente y su inquietudl
Primera,
-Ali
Yo Wngo de Dondc
Uted no ha ldo

\7ith the general disorientation that today dominates left parties and
theorists around the world, following the successive failures of state
socialism and of social democracy, one would hardly have expected a
small, relatively wealthy, and inconspicuous country in Latin America to
lVhy and how was
boldly announce it will create 21st century socialism.
tvhat are its prospects for
this possible in Venezuela? What does it mean?
success? These are the three main questions this book seels to answer'

The International Context

The election of a leftist president in Venezuela in 1998 foreshadowed
what would, in the following seven years, become a wave of successes for
left-leaning presidential candidates in Latin America. Leftists who
followed Hugo Ch'iez into the presidenry of their respective countries
were, first, Luiz Ignacio "Lula" da Silva in Brazil in October 2002, then
Lucio Gutierrez in Ecuador in January 2003, Nestor Kirchner in
fugentina in May 2003, Tabar€ Yazquez in Uruguay in October
2004, Evo Morales in Bolivia in December 2005, Rafael Correa in
2 GREGORY'WILPERT

Ecuador in November 2006, and then Daniel Oltega in Nicaragua, also

in November 2006. Vhile some of these modelated significantly shortly
after taking office, such as Gutierrez and da Silva, they represenr a wave
of left-of-center leade rs whose election came as a bit of a surprise giver.r
the aforementioned disorienrarion within the left around the world.
For practically the er.rtire 1990s "the Ieft," ranging from moderate
social democrats to lefrwing socialists, appeared to be somewhar per-
plexed as to what their actual political program should be. The fall of the
Berlin \Wall in 1989 and the subsequent implosion of the Soviet Union
and of other state socialist regimes signaled rhe complete discrediting of
state socialism and central planning as an institutional solution for
achieving dre ideals of socialism. At first, rhis collapse appeared to
vindicate social democrats, who had aiways argued in favor of mixing
state and market, in lieu of a complete abolition of the market.
However, it soon became obvious that social democrary was in a crisis
too. In the US, in Britain, ar.rd ir.r Germany, left-of-cer.rter leaders entered
office again in the 1990s, after a long absence, but found that their old
Keynesian recipes of state intervenrion in the market's dysfuncdons did
not work as well as they used ro. The globalization of financial markets
and massive indebtedness and deficits made old-sryle social democratic
programs unviable. Capital had become too mobile and the welfare state
too expensive for social democratic policies. As a result, Bill Clinton,
Tony Blair, and Gerhard Schr<ider tried ro devise a new more moderate
program for the left, which essenrially accepted the rnarket imperatives
that neoliberals had created in the 1980s and tried to balance budgers
and dismantle social programs. At the same time, they tried to keep their
left credentials by being slightly to the left of rheir more conservarive
opponents. Meanwhile, in Larin America, sirnilarly cenrrisr presidents
governed, partly as a result of the left having been purged from politics
during the dictatorships ofthe 1 970s and I 980s and partly because ofthe
constraints that massive state indebtedness and financial deregulation
placed on governance in Latin America too.
In short, social democracy had become ur.rviable in an age of unrest-
ricted capital flows and lack offinancial resources. Instead, neoliberalism
emerged as the dominant political ideology. This economic program had
been applied with a vengeance in Latin America thr.oughout the 1980s
and 1990s. The results of neo-liberalism, which meanr privatization of
state assets, free trade, stare fiscal austeriry, and deregulation ofthe labor
 INTRODUCTION 3

neo-liberalism's apostles had claimed

marker, were far from as good as
,t.y rvould be. Between 1980 and 1999, during che height of neo-
growth of the continent
tit .rrtir- in Latin America, per capita economic
*", " p^l,ry 117o, compared to an 80% per capita GDP growth in the
p*rlit, t,j years (a mostly Keynesian period), btt-tt" 1960 and 1979 '2
jAlro, ,h.r. meagef economic results and the material hardship many of
movements and often to
the policies implied led to widespread resistance
their violent repression. As we will see, venezuela came to be a prime
example of neo-liberalism's failures, of resistance, and
of repression'

A New New Left?

\(hat remained, then, as an economic program for the countries of Latin

and
America and for the left in general? State socialism, social democracy,
neoliberalism all seemed to have run rheif unsuccessful course. By the
early rwenry-first century no clear answers had emerged, but voters were
willing to give the left another opportuniry in Latin America, despite the
u"gn.rr.r, of their programs. However, of the leftist presidents that were-
el[t.d in this first decade, only one, President Hugo Chivez Frias of
Venezuela, eventually declared that he was following an explicitly anti-
capitalist and pro-socialist agenda. At first, despite his somewhat in-
fl^--"rory (some would say populist) rhetoric, chivez's policies were
equally moderate as those of his fellow Latin American leftists'
Two things stand out, though, when comparing Chivez with these
other presidents. First, ch6vez faced far more vehement and even violent
opposition to his presidency than the others, even though initially his
.orr...,. policies were nor much different from those of Brazil's Lula da
Silva or Chile's Michelle Bachelet. Second, Chivez's confrontation with
the opposition led him to eventually become a far more radical left
politician than he started out. It was not until after a coup attemPt in
2002, atvvo-month shutdown of the country's all-important oil industry
in2002-2003, and a presidential recall referendum in August 2004 that
Chivezdeclared his political program to be socialist, in January 2005-a
full six years into his presidency.
Of course, just because Chivez announced the pursuit of socialism
does not mean rhar his policies are socialist. Too often have politicians
claimed to be in favor of socialism, only to pursue policies that ended
either in a centrally planned dictatorship or in capitalism as usual' Thus,
 4 GREGORY \OTILPERT

to find out whether Chivez's policies match his rhetoric and to see if
these policies constitute a real alternative to state socialism, social
democracy, and neoliberalism, it makes sense ro examine them carefully.
Also, even if they consrirute a real alternative, do they actually lead
towards a better sociery?

The Path Towards Twenty-ffrst Century Socialism in Venezuela

Before examining the quesrion of whether Venezuela is actually heading
towards something that might be called rwenry-first century socialism,
the present study first tries to explain how and why rwenry-firsr century
socialism came to be on the agenda in Venezuela. That is, Chivezand his
Bolivarian movemenr appeared in Venezuela at specific rime in the
country's history, in a context in which social ^very
democracy and neo-
liberalism were probably more discredited than in most other countries
in the world.
Chapter 1, "The Dialectic of Counter-Revolution and Radicaliza-
tion," reviews recent Venezuelan history and how this history made a
radical project such as that ofChivez's Bolivarian revolution possible.3 It
shows how, ever since the 1920s, Venezuela had grown accustomed ro
constantly increasing oil revenues, which fueled the development of a
strong and economically interventionist state. However, when oil rev-
enues started along2}-year decline in the early 1980s and they could no
ionger support its large srare sector and a political system that bought
political loyalry with oil revenue. Poverry and inequaliry sky-rocketed to
the highest levels in Latin America in this period. The old political
system, which had grown increasingly corrupt and repressive and which
was held together with an exclusionary Nvo-parry pact, began falling
apart, eventually giving a complete political outsider such as Hugo
Chivez, who promised revolutionaqy change, the chance to win the
presidency in 1998. Another imporrant factor in Ch6vez's rise to power
was that his movement was based on a coalition between progressive
sectors of Venezuela's military and Venezuela's traditionally excluded
more radical left movements and parties.
As stated earlier, once elected, Chlvez g ve very radical speeches,
promising to eliminate poverry and corruption and to completely
overturn the country's ossified political system with a new consrirurion.
It is tempting to believe that Chivez's anri-poverry and anti-corruption
 1

INTRODUCTION

r)roqram is what incensed the country's old elite to launch an all-out

ir,rip^ig" to ousr him. However, it was actually his success in completely
dirpi".i"g the old elite from positions of power that provoked their ire.
During his first three years in office, Chivez's anti-poverty, anti-corfuP-
tio,.,, and redistribution measures were actually quite
modest. Rather, it
was rhe new consrirution, which required the reJegitimation
of all

branches of government and the resulting complete removal

of the
old elite from state power that angered them so much'
As a result, Venezuela's old elite refused to accept Chivez as the
legitimately elected president and engaged in a no-holds-barred effort to
ge-t rid of him . Chivez, though, proved to be a
particularly intransigent
io., *ho refused to concede to the opposition any of its demands' The
heightened conflict led to both a polarization of Venezuelan sociery and
to ihe splitting off of significant chunks of Chivez.'s coalition and their
joining ihe opposition. The conflict came ro its first major confrontation
with the nprilzoozcoup atrempt, which demonstrated the extent of the
opposition;s hubris. Not only did it not recognize Chivez as the
l.gjicimate president, but it had also completely ignored his growing
.o.-r,rtitn"n.y among the country's poor and excluded' The opposition's
miscalculations about Chivez's popularity among the poor and among
the military spelled the coup's failure.
This miscalculation of the opposition, which was rooted in its firm
belief that it represented the "reasonable" majoriry of the country and that
chivezwas nor a legitimate president, led ro several other failed adven-
tures. The next one was the two-month shutdown of the country's all-
importat.rt oil industry, from early December 2002 to early February 2003'
*here rhe opposition lost its power base in rhe oil industry. Next, it tried to
oust chivez via the legal means of a presidendal recall referendum. This
too failed spectacularly. Then, in December 2006, Ch|vez was re-elected
in a landslide victory of 630/o, to rhe 360/o of his main opponent'
By then, however, the combination of the opposition's implosion as a
result of its repeated failures, and the persistence of a new oil boom in
2004,hadliberated the chivez governmenr from the resrraints that most
leftists face once in office. Economically, the pressure to please inter-
national capital in the name of foreign invesrmenr and development was
practically .li*itt"t.d thanks to the boom in oil prices, Politically, the
opposition had lost crucial bases of power in the poliry, the military, the
oil-indur,ry, and in sociery in general, thereby freeing Chivez from the
 6 GREGORY \fILPERT

need to take opposition reacrions to his policies into considerarion.

Chivez thus discarded his earlier moderation and in early 2005 publicly
declared his conversion ro a new form of socialism, of "twenry-first
century socialism," which he would work on instituting in Venezuela.
The parties and sectors that supported Chivez enthusiastically went
along with the announcement because they too appeared to have been
radicalized by the preceding confrontations with the US-supported
opposition.

Identifring Twenty-first Century Socialism in Venezuela

The heart of the book, Chaprers 2 to 5, provide detailed descriptions and
analyses of the governance policy, economic policy, social policy, and
foreign policy of the Ch6vez government and the exrent ro which it
manages to approxirnate institutions that fulfill the ideals Chivez talks
about. In all four policy areas there are clear indications thar indeed the
government is pursuing innovarive policies that transcend the insritu-
tions of capitalism as usual. However, these policies are often conrra-
dicted or undermined by contravening policy tendencies. For example,
while the Chivez government has embarked on an imporrant project of
incleasing citizen participation in a wide variery of state institutions, it
has also increased the importance and srrength of the presidency, which
tends to undermine the participatory policies. In the area of economic
policy, the governmenr has gone a long way towards establishing
economic democracy, but the high oil revenues that cannot be guaran-
teed, and upon which many of these policies depend, threaten the long-
term viabiliry of self-managed enterprises in Venezuela. These rypes of
contradictions exist in all of the main policy areas examined here.
Despite the frequent contradicroriness of the policies, many of them
do lay the groundwork for institutions that would fulfill the ideals of
hvenry-first century socialism. This is a crucial achievemenr, not only for
Venezuelans, because it raises the hope for a Venezuela with more social
justice, but ir also provides a broader example of what left or socialist
politics of the future could look like. An analysis of the Venezuelan
institutions that work towards fulfilling sociery's ideals can help provide
orientation and hope to a disorganized, fragmented, and often demor-
alized left throughout the world.
However, in addirion to the frequent problem of contradictory
 IN:IRODUCTION 7

,..licies, there are even deeper obstacles

lurking within the Bolivarian
to do with the Bolivarian movement itself.
I*'JO. projecr, which have
prospects,"
.rr"prer,,,opportunities, obstacles, discusses these
ii.l"r, impediments for the
fir.d, that the rhree most important
"ir,".f., ",ld
"Ciarrrgovernmenr's project are the persistence of a patronage culture,
I. complete dependence of the Bolivarian movement on Chivez,
'^na".*1
cil-raurr' t o*.r top-do*n governance,
which undermine the creation
If Venezuelan sociery and the Chivez govern-
li" o"rrl.ip"rory sociery.
il*i -""rg. to resolve these rhree key issues that are internal to the
Bolivarian Inorr.-..t,, if the policies themselves are made more con-

Jr*nr, ",rd if there is no significant outside interference, then Venezuela

be the place of grearest hope for establishing freedom,
-1gh, *.tt
justice in over a Seneration'
--Thor. and social
.o,lrli.y,
who are interested in developing a basis for evaluating what
and whether the
fiMenty-first centuly socialism might mean in.Venezuela
policies could actually lead towards the fulfillment
Chlrvergovernment's
the ideals of twenry-first cenrury socialism, should read the appendix,
of
"twhat is Twenry-first Century Socialism?" This first Presents some
Chitvez
seneral ideas about this conception of socialism. Unfortunately,
ir^, no, clearly defined nvenry-firsr cenrury socialism, other than to say
rhat it is about establishing liberry, equaliry, social .iustice, and solidariry'
He has also indicated that it is distinctly different from state socialism.
However, such ideals, by themseives, make nventy-first century socialism
indistinguishable from mosr orher social projects of the twentieth and
rwenry-first century. Surely, what distinguishes wvenry-first century
soci"lism would have to be the institutions it aims to create, not the
ideals it is pursuing. At heart, such institutions would be characterized by
their democratic and parriciparory nature. Also, if one establishes that the
economic institutions of capitalism-of privare ownership of the means
of production, the market system' and a Pro-capitalist state-are incap-
able of fulfilling sociery's ideals, then the new institutions must clearly
distinguish themselves from these institutions. This appendix goes on to
outlin-e what non-capitalist, perhaps 21st century socialist, political and
economic institutions could look like.
 1

The Dialectic of Counter-Revolution

and Radicalization'

Los que mueren por la vida

no pueden llamarse muertos
y a partir de este momento
es prohibido llorarlos'
Primera'
-Ali
Los Que Mueren Por la Vida

The history ofthe Ch6vez presidency apPears to have been characterized'

above all .1r., by a dialectic of counter-revolution and
radicalization,
conservative forces attempted to prevent revolution
where the country's
before one had even begun and chhvez and his followers were then
radicalized in reaction. This counter-revolution is much like the one

famously described by Herberr Marcuse (1972), in reference to devel-

is
optn.n,, in the 1960s in the US and Europe, where counter-revolution
*.ffort to prevenr revolution before one has even taken place and not an

effort to urdo already established revolution. That is, venezuela's old

"n
elites, in politics, in the economy, the media, the church, and the labor
rnou.rn.n,, repeatedly attempted to overthrow Chhvez and with every
failure merely provoked him, his governmenr, and his suPportefs among
the pooruo ,"Ji..lir.. However, why were so many ordinary Vrcnezue-
lans and why was Chivez open to such radicalization? 'Why didn't they
react in jusi the opposite manner' as has been so common in other
countries throughout history, to moderate their approach
The perhaps Lost imPortant reason Venezuela was open to a radical
transformation, at first in favor of replacing representative democrary
with participatory democracy and later of replacing capitalism with
 IO GREGORY 'V?'ILPERT

socialism, was Venezuela's rather disappointing experience with both

capitalism and representative democracy in the last two decades of rhe
20th century. That is, while the period from the end of Venezuela's last
dictatorship in 1958 to rhe end of its oil boom days in 1978 caused
Venezuelans to believe that their country would soon join the developed
world, the period from 1979 to 1999 proved to be two decades of bitter
disappointmenr, nor just economically, but also politically. In order to
understand where this disappointment came from, we need to under-
stand how Venezuelan's expectations about representative democracy
and capitalism were raised during its period of stabiliry and boom,
between 1958 and 1978, at a time when most of the rest of Latin
America was governed by brutal dictatorships.

Pre-conditions for Venezuela's Transformation

Venezuelan economy, poliry, sociery, and cuhure are all directly linked to
the country's experience with oil. In one way or another one can trace rhe
country's ups and downs to the ups and downs of the oil economy.

Rising Expectations:
The Oil Boom and "Pacted" Demouacy Q95S-1975)

Berween the time oil was first discovered in Venezuela, in the early 20th
century, until the 1930s, oil became the counrry's single most important
product, export, and source of private and public wealth. Already by
1920 Venezuela was the world's largest oil exporting counrry. By 1935
oil exports consritured 91.2o/o3 of the countqy's exports. prior to that, the
economy had been a traditional Ladn American agricultural economy,
based on cocoa, coffee, sugar, corton, and tobacco production.
As oil became increasingly important, the counrry's economy shifted
from an agricultural counrry ro a counrry in which oil production,
commerce, and services dominated. tilZhile agricultural production made
up one third of Venezuela's GDP in the 1920s, by the 1950s this had
dropped to l0o/o and by 1998 to amere 60/o - the lowest percentage in all
of Latin America.
As a result of this decline, Venezuela's landed elite, which is tradi-
tionally fairly strong in most of the rest of Ladn America, lost its power
very early in the 20th century. AIso, the emphasis on oil and the
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